2010 full year results conference call - nestlé · 2019. 7. 14. · billionaire brands mid-high...
TRANSCRIPT
2010 Full Year Results Conference Call
James SinghChief Financial Officer
Disclaimer
17 February 2011 2010 Full Year Results1
This presentation contains forward looking statements which reflect Management’s current views and estimates. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments.
Strong Full Year 2010 PerformanceImprovements in organic growth, EBIT, EPS
Actuals
Net Profit
Operating Cash flow
6.0% organic growthnet divestments +1.8%, FX of -3.8%
Sales (Continuing)
EBIT +30 bps reported and constant currency
Normalisation of working capital after 08/09 volatility
Includes 2010 profit on sale of Alcon
Underlying EPS +7.4%. +10.3% constant currencyImproved operating performance
17 February 20112 2010 Full Year Results
6.2% organic growth, net divestments -0.6%, FX of -3.6%
Sales (Group)
+100 bps excl. goodwill; -10 bps inc. goodwillReturn on Invested Capital
15.6% increase to CHF 1.85 per shareDividend
109.7 bn
3.32
13.6 bn
104.6 bn
14.0 bn
6.1 bn
34.2 bn
Trade Net Working Capital - 40 bps to 7.5% of sales7.8 bn
36.1/15.5%
Sales DevelopmentGroup and Continuing
17 February 2011 2010 Full Year Results3
CHF 104.6 bnContinuing
Pricing
Acq./Div.
Exchange Rates
CHF 109.7 bnTotal Group
RIG
OG = Organic Growth RIG = Real Internal Growth
+2.0%total
+6.2%OG
+6.0%OG
+4.0%total
+1.6%
+4.4%
-3.8%
+1.8%+1.6%
+4.6%
-3.6%
-0.6%
-0.1
0.5
1.6
4.2
3.63.3
3.5
5.4
Q1 Q2 Q3 Q4
4.5
3.9
4.44.6
6.2
5.5
6.06.4
Q1 Q2 Q3 Q4
17 February 20114
2009 2010
Strong RIG momentum maintained
RIGOG
Continuing operations
2010 Full Year Results
* each region includes the Zones, Nestlé Waters, Nestlé Nutrition, Nestlé Professional, Nespresso and F&B JVs
Total Food & Beverages: growth everywhere
3.7%
5.7%
10.2%
3.0%3.5%
8.3%
Europe34.7
Americas46.8
AOA22.2
OG % RIG %
17 February 2011 2010 Full Year Results5
Market leadership
Growth is broad-based
All markets, emerging & developed,offer opportunities for growth
Sales*(CHF bn)
4.4
3.1
6.9
9.5
1.4
6.0
3.3
11.5
13.1
1.7
Continuing Operations Developed Markets Emerging Markets BRIC PIIGS
17 February 2011 2010 Full Year Results6
Organic growth: broad-based performance
RIGOG
7
Emerging markets Cap-ex:Major commitments in 2011
900
12001400
1700 17001900
2500
2005 2006 2007 2008 2009 2010 2011
CHF Mn
Running above developed markets as % of salesBuilding new platforms for proven growth opportunities
17 February 2011 2010 Full Year Results
5.9%
3.0%Broad-based growth in Latin America: double-digit for Region & Ambient dairy, Chocolate, Coffee
EBIT%Efficiencies, brand investment; acquisition below zone average but accretive to Group
Zone Americas: 5.9% organic growth
17 February 2011 2010 Full Year Results8
Fourth quarter acceleration
North America growth driven by PetCare, Confectionery and BeveragesShare gain in PetCare & Ice cream among bigger categories
RIGOG
Sales (CHF bn) 34.3EBIT margin 16.5% (-30 bps)
Eastern Europe impulse challenging, but market shows signs of recovery
EBIT% Continued efficiency gains, volume growth, increased brand support
2.5%
1.7%
Zone Europe: 2.5% organic growth
17 February 2011 2010 Full Year Results9
Strong growth with market share gains driven by innovation and brand investments
All large Western European (WE) markets grew: winning the big battles for share
Strongest WE categories: PetCare, Soluble Coffee, Frozen Pizzas and Chocolate
RIGOG
Sales (CHF bn) 21.6EBIT margin 12.6% (+20 bps)
Zone Europe: Key drivers of growth
17 February 2011 2010 Full Year Results10
Successful innovation: multi-year regional roll-outs
Appropriate level of brand support
Ability to drive both category growth and category value
Market share gains
Highly efficient operating structure
High scoring customer service levels
Virtuous circle: efficiency drives customer service; innovation, brand support & ability to create category
value drive outperformance
8.7%
7.0%Best categories: Ambient Dairy, Ambient Culinary and Beverages; good share performances
PPPs grow double-digit growth
EBIT% Driven by strong growth and savings initiatives
Sales (CHF bn) 17.4EBIT margin 16.9% (+20 bps)
Zone AOA: 8.7% organic growth
17 February 2011 2010 Full Year Results11
Strong despite tough Q4’09 RIG comps
Developed markets contribute growth
Double-digit performance across emerging markets
RIGOG
Sales (CHF bn) 10.3EBIT margin 18.1% (+70 bps)
Nestlé Nutrition: 6.7% organic growth
17 February 2011 2010 Full Year Results12
Continued good organic growth driven by brand investments and new product launches in Infant Nutrition (IN)
Double-digit growth in emerging markets Good performance in North America
The big three IN brands grew double-digit
Good market share performance in our key markets, including Jenny Craig
EBIT% Sales growth, mix and savings initiatives
RIGOG
6.7%
5.5%
Sales (CHF bn) 9.1EBIT margin 7.4% (+40 bps)
Nestlé Waters: 4.4% organic growth
17 February 2011 2010 Full Year Results13
Positive organic growth in all regions; double-digit in emerging markets
Share gains in North America; good performances by regional brands & Nestlé Pure Life
Share gains in Europe: Good performances by local brands and Perrier & S.Pellegrino
EBIT%Growth in developed world & emerging manufacturing & distribution efficiencies
RIGOG4.4%
4.8%
Nespresso CHF 3bn+, OG 20%+; share up to 19.7%Double-digit growth in biggest marketsClub membership up 35%12,300 cups drunk per minute: up from 10,000 in 2009
EBIT%All constituents improved
Nestlé ProfessionalGrowth in all Zones driven by Beverages, Ambient dairy & emerging marketsSuccessful launches of new super-premium Nescafé systems solutionsVitality acquisition going well
Other Food & Beverages: 9.8% organic growth
17 February 2011 2010 Full Year Results14
9.8%
8.5%RIGOG
Sales (CHF bn) 11.0EBIT margin 16.4% (+70 bps)
Product Groups
17 February 2011 2010 Full Year Results15
Soluble Coffee – growth on growthInnovation, renovation, PremiumisationPPPs, NHW all driving growthHighlights: LatAm, China, Middle East, France, Japan, USAMarket share gains
Powdered: near double-digit OGDouble-digit OG by Milo and NesteaNesquik performing well in France and US
Ready-To-Drink; double-digit OGExcellent growth in all segments
EBIT%Mix, brand support, launches
Powdered & Liquid Beverages: 8.5% OG
17 February 2011 2010 Full Year Results16
RIGOG
Sales (CHF bn) 20.6EBIT margin 21.0% (-70 bps)
8.5%
6.8%
Milk Products & Ice Cream: 6.6% OG
17 February 2011 2010 Full Year Results17
Milk ProductsNear double-digit organic growthStrong performance in key ZonesMarket share gains globally
Ice CreamMarket share gains: US, parts of EuropeUS snacks & Cups grew double-digitEuropean cones business performing well
EBIT%Marketing spend upEfficiencies & mix in Dairy & Ice creamGrowth leverage in Dairy
RIGOG
Sales (CHF bn) 20.3EBIT margin 12.9% (+90 bps)
6.6%
3.9%
Frozen & Chilled FoodPizza performed well overallUS impacted by weak economic environment – Lean CuisineBuitoni, Thomy and Herta showing good growth
Ambient CulinaryMaggi double-digit in emerging marketsMarket share gains in Europe, including Germany & FranceInnovation in PPPs delivering strong growth
EBIT%Pizza acquisition costs, brand supportand lower sales of Lean Cuisine
Prepared Dishes & Cooking Aids: 2.6% OG
17 February 2011 2010 Full Year Results18
2.6%2.1%
RIGOG
Sales (CHF bn) 18.1EBIT margin 12.3% (-60 bps)
Confectionery: 7% organic growth
17 February 2011 2010 Full Year Results19
7.0%
3.5%
Growth in all segmentsShare gains in many markets
Good growth in US and UKUK: Kit Kat had a strong anniversary year
Sustained growth in India and China driven by PPP activities
Russia dilutive to growthSold generic confetti business
EBIT%Good cost management & leverage from growth
RIGOG
Sales (CHF bn) 12.1EBIT margin 13.8% (+20 bps)
All segments and regions contributeInnovation pipeline continues to roll-out
Lower value products now out of portfolio
Billionaire brands mid-high single-digit OG
North America – share gainsGrowth in all segments
Europe – share gainsGood growth specially France, Spain, Russia, UK
EBIT%Product mix, efficiencies & raw materialsavings, increased brand investment
PetCare: 4.9% organic growth
17 February 2011 2010 Full Year Results20
4.9%3.6%
RIGOG
Sales (CHF bn) 13.1EBIT margin 17.3% (+100 bps)
PetCare: positive short & long-term outlooks
17 February 2011 2010 Full Year Results21
Global market share increased four years in a row
Global No.1 in three segments: 79% of the category
No.1 in Wet Cat: growing 2x Wet Dog (No. 2)
No. 1 in Dry Dog – Dog segment is 75% dry
Dog & cat population increasing 2% p.a.
Emerging market exposure growing fast
Nestlé leads in the exciting petcare segments
Billionaire Brands: 7.1% organic growth
10.1 to 20%
7.6 to 10%
5.1 to 7.5%
3.1 to 5%
0.0 to 3%
Below 0%
Over 20%
17 February 201122 2010 Full Year Results
Central innovation initiatives deliver 80 bps OG
Systems PPP NHWPremium
23 17 February 2011 2010 Full Year Results
Strong organic growthEfficiencies & effectiveness
24
Market uncertainty; cost volatility
Optimise business performance
Leverage competitive advantages
Focus & discipline
Summary: F&B operating performance
17 February 2011 2010 Full Year Results
Strong performance: geographies & categories
Leveraging scale: enhance competitive advantages
Improved market shares
Aligned behind the Nestlé Roadmap to deliver the Nestlé Model in challenging environment
2010 Full Year Results25
EBIT performance: Continuing Operations
13.1%+40
13.4%
+30+0
+20
Distribution MarketingCOGS Admin. R&DFY09 EBIT FY10 EBIT
Cost of goods down 40 bps; distribution down 20 bpsMarketing up 100 bps, with consumer-facing marketing spend up 13.2% in constant currenciesAdmin costs down 70 bps: fixed costs, growth leverage, pensionNestlé Continuous Excellence exceeds CHF 1.5bn of efficiencies
17 February 2011
-100+70
EBIT 14.6 14.8 N/AOther income/expenses (0.7) 20.6 +2130Net Financial income/expense (0.6) (0.7) -10Profit before taxes & Associates 13.3 34.7 +2140Taxes (3.1) (3.4) -30Share of results of Associates 0.8 0.9 +10Profit for the period 11.0 32.2 +2120 Attributable to non-controllinginterests (1.3) (1.0) +30
Attrib. to the shareholdersof the parent (Net profit) 9.7 31.2 +2150
Underlying EPS (CHF) 3.09 3.32 +7.4%Constant currencies +10.3%
As % of sales FY 2009 FY 2010 Diff. basis points(rounded)
P&L: EBIT to Net Profit: Group
17 February 201126 2010 Full Year Results
17 February 2011 2010 Full Year Results27
Operating Cash Flow of CHF 13.6bn
Impacts of currencies, working capital normalisation, sale of Alcon
Trading net working capital improves as percent of sales
Cash Conversion Cycle accelerates by 3 days
Cash flow and working capital
TNWC in % of NPS(Continuing operations)
2007 2008 2009 2010
9.6% 9.1%
7.9% 7.5%
Trade Net Working Capital continues to improve
17 February 201128 2010 Full Year Results
Trade Net Working Capital - 40 bps as a percent of sales
TNWC determined based on values as at December 31st
Trend of net debt in 2010
17 February 2011 2010 Full Year Results29
18.1
1.3*Net Debt01/01/10
Net Debt31/12/10
*Adjusted Net Debt including investment of Alcon cash proceeds of CHF 2.6bn
Key Items CHF billions
Cash Out:Share buy-back (incl. Treasury shares) 11.9 Dividend 5.4
Cash In:Net M&A 24.9Free Cash Flow, FX & Others 9.2
Increasing dividend and payout ratio
17 February 2011 2010 Full Year Results30
0.901.04
1.221.40
1.601.85
2.152.41
2.80 2.823.09
3.32
2005 2006 2007 2008 2009 2010*
Underlying EPSDividend
(CHF)
Underlying EPS/Dividend Payout Ratio
41.9% 43.2% 43.6%
49.6%51.8%
55.7%
*Proposed dividend
* Announced & proposed
Total cash returned to shareholders
17 February 2011 2010 Full Year Results31
4.04.6 5.0 5.4
6.1
4.4
8.77.0
10.1
4.8
2007 2008 2009 2010 2011*
Share Buy-BackDividend
(CHF bn)
2007-2011: CHF 60bn cash returned to shareholders
Alcon disposal: value-creation
17 February 2011 2010 Full Year Results32
2002
2009
2010
2008
2007
2006
2005
2011
Alcon cash proceeds Share buy-backs
4.1 bn
29.9 bn
10.7 bn
44.7 bn
- 7.0 bn
- 10.1 bn
- 8.7 bn
- 4.4 bn
- 2.7 bn
- 1.3 bn
- 4.8 bn
TOTAL - 39.0 bn
The share buy-back programmes contributed to improvement of EPS
17 February 2011 2010 Full Year Results33
2.152.95
2005 2010
Over the last 5 years, we have repurchased 718.9 mn of shares
The four share buy-back programmes contributed about CHF 0.37 to the EPS in 2010
Without the share buy-back, CAGR would have increased by only 6.5%
0.373.32
Evolution of Underlying EPS 2005-2010
Summary: Total Performance Framework
34
Achieving Simplicity
Investmentfor Growth
ScaleBenefits
DrivingPerformance
THE NESTLÉ MODEL
|| 17 February 2011 2010 Full Year Results
2010: Summary and conclusion
17 February 2011 2010 Full Year Results35
We entered 2010 with a good understanding of the challenges we faced
We were aligned behind our roadmap, but fast, flexible and entrepreneurial in our markets
We delivered top line and bottom line: all geographies and categories contributed
We have had our strongest market share performance since we had this granularity of measurement
We outperformed our industry and built momentum through the year, providing impetus for 2011
2011: another set of challenges; another opportunity to outperform
17 February 2011 2010 Full Year Results36
We understand the challenges we face
We are taking a holistic, total value-chain approach to managing them
Our innovation pipeline is rich – bringing differentiation& added value
We have strong momentum with positive mix effect
Our objective: to deliver the Nestlé Model
Long-term inspiration with short-term delivery
17 February 2011 2010 Full Year Results37
Foreign Exchange Movements
17 February 2011 2010 Full Year Results38
CHF per FY 2009 FY 2010 (%)
U.S. Dollar (1) 1.08 1.05 - 3.5
Euro (1) 1.51 1.38 - 8.6
£ Sterling (1) 1.69 1.61 - 5.1
Real (100) 54.98 59.14 +7.6
Mex. Peso (100) 8.03 8.24 +2.6
Yen (100) 1.16 1.19 +2.6
Weighted Average Exchange Rates
Operating Segment FX Impact On Sales
17 February 2011 2010 Full Year Results39
(%) 1Q10 HY10 9M10 FY10
Zone Europe -0.7 -2.8 -5.3 -6.7
Zone Americas -4.9 -2.5 -3.2 -3.9
Zone AOA +0.5 +3.1 +2.4 +1.7
Nestlé Waters -4.6 -3.0 -4.2 -4.8
Nestlé Nutrition -3.6 -1.9 -2.9 -3.8
Other F&B -1.1 -1.3 -3.1 -4.3
Total F&B -2.6 -1.5 -2.8 -3.8
2010 Full Year Results Conference Call